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Why Trading the News is Probably a Bad Choice

You might have noticed that I don’t post much about the news like other forex blogs. I don’t bother with what the next interest rate would be or the quantitative easing of currencies. I realized that if you depend so much in the news, you’ll end up confused.

Don’t get me wrong, there are a couple of people who trade solely on the news, and its a strategy that I never got the hang of. Its fun to see your account go up the moment the news was released, and provided you’re on the right direction, it can provide so much high. And I think I understand why some people would depend so much on the strategy. Its fun!

But in my experience in messing around with the news as a forex trading strategy, while waiting for the news to come out, like for example, the interest rates. Its hard for an ordinary person to predict what would be the interest rate. Even experts can’t be so accurate to predict it, so that leaves me “guessing” what will be the interest rate. And with time pressure on your side before the news broke out, its just a matter of guessing now. With 50% chance of going wrong, you’ll eventually go break even or go bankrupt. And with stress as its effect, I don’t think I would last much with this strategy.

I don’t know, some people may make a killing out of it, I see a lot of people depending on news for their trading and investing decisions. I see a lot of this in stocks and currencies particularly.

Forex and CFD’s are leveraged products that carry a high degree of risk to your capital, and it is possible to lose more than your initial investment. Leveraged trading may not be suitable for all investors, so please ensure you fully understand the risks involved and seek independent advice if necessary.